South Dakota opts not to run health care exchange

Nov. 16, 2012

Dennis Daugaard

Written by

Dave Hewett

Bernie Hunhoff

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Key elements in South Dakota’s decision not to run a health care exchange, and a sampling of reaction.

DEADLINE: Under the Patient Protection and Affordable Care Act, states had until today to tell the federal government whether they plan to operate a health care exchange themselves. The deadline was extended to Dec. 14 after several states requested more time.

S.D.: Gov. Dennis Daugaard is carrying through with his decision not to run an exchange for South Dakota, according to spokesman Tony Venhuizen.

States had until today to tell the federal government they plan to operate such an exchange themselves, but at the last minute, the government expanded the deadline to Dec. 14 after several states requested more time.

WHAT IT MEANS: Regardless of the deadline, Daugaard has no intention of having South Dakota build its own health care exchange, his ,Tony Venhuizen, says. That means The federal government will build and operate South Dakota’s health care exchange, which is a marketplace on which individuals can buy health insurance and, if eligible, receive subsidies.

WHY: Daugaard says he thinks the cost of operating an exchange would be too high — up to $7 million per year. By letting the federal government run the exchange, South Dakota gives up some control over how it is structured but saves money.

SUPPORT: Dave Hewett, president of the South Dakota Association of Healthcare Organizations, said he backs Daugaard’s decision to pass on running the exchange.

“The fixed costs associated with setting up a state health insurance exchange in South Dakota just can’t justify it,” Hewett said. “There are too few people who would be impacted by that.”

OPPOSITION: The Democratic leader in the state House of Representatives, Rep. Bernie Hunhoff of Yankton, said federal subsidies should provide great incentive for South Dakota absolutely to expand coverage.

“I can’t imagine that any state wouldn’t jump at the opportunity,” he said. “We’re paying the costs for health care for the uninsured as it is ... and we’re not going to get the benefit like other states will.”

WHEN: On Jan. 1, 2014, exchanges will be operational.

EXCHANGES: Insurance plans on the exchange are required to sell to anyone and can vary the cost of premiums based only on age and whether individuals smoke. People will be eligible for government subsidies depending on family income, with subsidies forfamilies up to 400 percent of the federal poverty line.